in UK for a few years - worth getting a pension?

nifta

we've lived in the UK for a year or so, and will remain here for another few - up to maybe 5 years.

currently my company does not offer a pension, but they're planning to start one soon.

is it worth me joining the plan? even if the company doesn't make any contributions? (i'm sure they will)

if they decide not to offer a plan, would it be worth taking out a stakeholder pension myself? i'm on the high tax rate, so there would decent tax savings.

note i have a cash isa, and will soon start a s&s isa - if i don't have the pension then i will put more money towards the s&s isa.

if i do have a pension, what happens when i leave the country? can i just leave it and access it when i'm at retirement age?

sorry if these are silly questions - i've looked around for information, but our situation is never really talked about.

cheers,

Mike

david78

Mike -- welcome to the MSE forums.

There are no such thing as silly questions here.

When the company starts the pension, it is worth you joining. They are not likely to offer a pension and not pay any contributions -- it would not be worth it.

Until then you should use your cash and stocks and shares ISAs.

Don't overestimate the tax benefits on pensions (discussed on the pension vs. ISA thread). But don't overlook those employer contributions if you can get them.

Not sure about what happens to you pension if you move abroad, so others will need to answer your specific questions. (I suspect you just leave it, and get it paid overseas when you retire. I read somewhere that you might not be able to take the 25% tax free cash in some countries.)

EdInvestor

Hi Mike

Hard to say really: the trouble with pensions is that the money is locked in until you're 55 and who's to know where you will be, or what the rules will be, when you want to get at it?

If you have a fairly clear idea of where you are likely to end up when retired then it's sensible IMHO tro check their rules about foreign pensions and try to align your UK arrangments to suit.

But the world is becomning increasingly global as far as finance is concerned, so it's not hard to see that pensions might be completely portable by the time you retire.

On the other hand, it may be better to invest the money in something that's portable now, so you can take it with you when you leave.

competitionscafe

Not sure if this helps Mike, but this was in the FT Money section this weekend:

http://www.ft.com/cms/s/1d86b5d8-bdb0-11db-bd86-0000779e2340.html

nifta

cheers for the replies.

well, after all that, i chatted to the boss today and apparently there's been a u-turn and chances are very slim there will be any company pension in the forseeable future (definitely not one with company contributions). annoying.

i'm still a bit unsure whether taking out a stakeholder pension on my own is worth it (with my own pre-tax contributions).

competitionscafe: thanks for that. i'm actually from NZ, where we don't have the rather mean system the US does. but with that said, my wife is american and has a pension at her company here in the UK so that article might well come in handy!

Cook_County

Mike:

1. You can invest up to your earnings/£215,000 each year and get UK tax relief.

2. If you move back to NZ you can transfer the UK pension money to a NZ pension/super - but you won't be able to take more than 25% as a lump-sum (and then no earlier than age 55). If you do take more you'll be subjected to UK tax at 55%.

3. You and your wife are not UK domiciled so should invest offshore so you pay zero UK tax on interest, dividends, capital gains etc. This will give you both much more flexibility than an onshore ISA.

4. As your wife is American she will be filing every year in the US so you my choose to have more investments in your name to keep them out of the US tax net. Do be aware though of US gift tax filing if you transfer large amounts.

5. Your wife should never own UK unit trusts, investment trusts or other collective UK investments that are hit by the US PFIC regime.

6. Your joint tax position is complex. There are ways to save you both considerable amounts of money but you'll probably need personal advice.